Articles in English 105
August 08, 2014
To defenders of the state, "anarchy" is a scary concept. They claim that we need government intervention to protect us or all hell will break loose.
But in fact we live anarchy every day, in one of the most crucial aspects of our lives: dating. Every day people meet, date, have one-night stands, fall in love, and break up; all without government intervention.
Peter G. Klein and Nicolai J. Foss
July 19, 2014
Mises Institute Senior Fellow Peter Klein and Associated Scholar Nicolai Foss were interviewed by Ángel Martín Oro for Sintetia.com. Klein and Foss discuss their 2012 book Organizing Entrepreneurial Judgment: A New Approach to the Firm, published by Cambridge University Press.
Andrew B. Wilson
July 11, 2014
Ludwig von Mises, a mentor to Friedrich Hayek and a major figure in economics in his own right, set out his views on capitalism and inequality in a slender book (just 113 pages) called The Anti-Capitalistic Mentality. First published in 1954, and readily available online for less than $10, it is well worth reading today.
June 26, 2014
Today, many Christians feel it natural to adopt a brand of social conservatism when it comes to politics and public policy. Not only do we see them hold public demonstrations against what they view as social vices, they also usually call for legislation to regulate, control, and ban these activities. The same religious zeal (which is not a problem per se), which brought alcohol prohibition in the 1920s is still here today. Numerous governments around the world have laws that criminalize peaceful and consensual sexual activities between those of the same sex. Christian leaders and movements have policies.
June 28, 2014
Despite claims to the contrary in the mass media, Japan's economy is continuing to suffer mightily under the leadership of Prime Minister Abe Shinzo. Abe is from a famous family and he's a convincing talker, so he was able to bamboozle people into believing that he could make Japan prosper with his three arrows. These metaphorical arrows stand for "monetary stimulus," "fiscal stimulus," and "structural reform."
June 16, 2014
Some Catholic clergy have, once again, denounced supporters of laissez-faire capitalism. Cardinal Oscar Rodriguez Maradiaga claims that the free market economy is "a new idol" which creates inequality, excludes the poor, and that "this economy kills." Cardinal Maradiaga does not speak alone. He quoted Pope Francis in his recent remarks and claimed that since the Pope "grew up in Argentina," he "has a profound knowledge of the life of the poor."
June 13, 2014
Although a majority of Colorado voters successfully forced the state government to legalize the possession and sale of cannabis in 2012, this popular initiative did not of course bind the governments of surrounding states to a similar degree of tolerance.
June 11, 2014
The European Central Bank (ECB) recently imposed negative deposit rates and is preparing a form of quantitative easing (QE) to purchase asset backed securities, corporate bonds or possibly bailout bonds. This policy may seem surprising. Why would the ECB want to try to force banks into making bad loans, or consider implementing a policy of quantitative easing that has clearly been a total failure (with obvious unintended consequences) in both the USA and Japan? The answer lies elsewhere. Under the guise of avoiding deflation or "low-flation," the ECB is, in reality, panicking and trying to save itself from the executioner's axe.
Jörg Guido Hülsmann
May 31, 2014
[A selection from Deflation and Liberty.]
The production of money in a free society is a matter of free association. Everybody from the miners to the owners of the mines, to the minters, and up to the customers who buy the minted coins — all benefit from the production of money. None of them violates the property rights of anybody else, because everybody is free to enter the mining and minting business, and nobody is obliged to buy the product.
May 22, 2014
Canada, a federal state consisting of 13 federal units — ten provinces and three territories — has a relatively long history of agricultural policy. While sometimes similar to American agricultural policies, there are key differences with Canadian agriculture that may help illustrate the economic costs of intervention in differing economies.
May 10, 2014
The bottle is now labeled libertarianism. But its content is nothing new; it is what in the nineteenth century, and up to the time of Franklin Roosevelt, was called liberalism — the advocacy of limited government and a free economy. (If you think of it, you will see that there is a redundancy in this formula, for a government of limited powers would have little chance of interfering with the economy.) The liberals were robbed of their time-honored name by the unprincipled socialists and near socialists, whose avidity for prestige words knows no bounds. So, forced to look for another and distinctive label for their philosophy, they came up with libertarianism — good enough but somewhat difficult for the tongue.
Llewellyn H. Rockwell Jr.
May 05, 2014
Marxists were notorious for infighting over the most trivial differences. One group would secede from another, reverse the word order of the group it had seceded from, and declare itself the new and pure group. The first group, the new group would declare to the world, was part of the fascist conspiracy to suppress the coming workers' triumph, even though the differences between the two groups were completely undetectable even to an expert.
May 01, 2014
Murray Rothbard once noted that "One of the most common charges leveled against the free market is that it reflects and encourages unbridled 'selfish materialism' ... it distracts man from higher ideals. It leads man away from spiritual or intellectual values." But that allegation is far from true.
April 17, 2014
It is not an exaggeration to say the current reputation of economists is probably just below that of a used car salesman. The recent failures of economic policies to boost growth or employment have tarnished this image even more. This, however, is in sharp contrast to the past when economists were seen as the intellectual roadblock to popular misconceptions, bad ideas, or more importantly, government policies sold to the public on false assumptions. Popular slogans such as "protecting American jobs" play on nationalism, but in reality only serve special interests. The economist of the past would never have hesitated to highlight the fallacies in such reasoning.
Most economists today, however, have sold themselves to the enemy. They work for government agencies such as the IMF, OECD, World Bank, central banks, or academic institutions where their research is heavily subsidized by government agencies. To succeed they have to "toe the line." You don't bite the hand that feeds you.
Today, these economists and bought-and-paid-for journalists inform us of the dangers of deflation and the risks of " low-flation," and how the printing press will protect us from this catastrophe. Yet there is no theoretical or empirical justification for this fear. On the contrary, a stable money supply would allow prices to better serve the critical function of allocating resources to where they are most needed. The growth resulting from stable money would normally be associated with rapidly falling prices as was the case during most of the nineteenth century.
When President Obama first talked about raising the minimum wage, Paul Krugman, a Nobel Laureate in economics, quickly published an article supporting such an increase. Yet, even a first-year student in economics knows price controls distort the resource allocation function of prices, thus benefiting one group or special interests at the expense of the rest of society. Although some will receive a higher minimum wage, many others will simply be thrown under the bus. A political pundit should not be masquerading as an economist.
Economists also have "physics envy" and are enamored with empiricism and mathematical models. To work in a central bank you have to be familiar with, if not a quasi-expert on, DSGE models. The problem with these models, or any economic model, is that the parameters are not constant, most of the variables are interrelated with constantly changing interrelationships and omitted variables, like expectations, some of which being immeasurable, are conveniently assumed away as unimportant. That is like taking a road map of shipping lanes and omitting the islands.
Economics is a social science and techniques borrowed from the physical sciences are simply inappropriate. Since we do not have a laboratory to conduct economic experiments, it is difficult to distinguish between association and causation or correctly determining the direction of causation. Economic activity is based on human actions, with very little empirical regularity. It may be a sunny day, and you have skied for three days. This does not mean you will go skiing on the fourth day. Your actions simply cannot be modeled like the reactions of lab rats in a biology experiment. Unlike the reaction to noise from the zombies in the walking dead, humans do not react necessarily to the same events in the same way. Economists at the Fed must be scratching their heads as to why businesses did not react to lower interest rates as it did after the dot-com bubble. It's the old adage of "fool me once, shame on you; fool me twice, shame on me."
When one attains a Ph.D. in physics or medicine, he does not spend time understanding theories from 200 years ago. The profession is always moving forward, right? In economics, we wrongly take the same attitude. Macroeconomics as a profession has not advanced but has regressed. We had a better understanding of macroeconomics 80 years ago. Politicians put Keynes on a pedestal because he gave them the theoretical foundation to justify policies that had been justifiably ridiculed in the past by the classical economists.
These economists such as Smith, Say, Ricardo, and Mill fought hard to dispel the popular misconception that the problem was overproduction and a lack of money. Today, the leading economists are telling us everything will be fine if we can boost demand (hence, too much production) or have more money through quantitative easing. These are the same popular misconceptions promulgated by mercantilists 250 years ago. The difference, today, is that economists are the mercantilists's ally instead of their enemies.
The role of the economist should be to explain not only the direct effects, but also the indirect effects of economic policies. The economists should not only tell us what is seen, but what is not seen, and more importantly what should be foreseen. Economists in unison should have informed the public that the massive government spending after the crash of 2008 would have created more growth and employment if the money had been left in private hands. To fund "cash for clunkers," the government borrowed money that would normally have been used to build plants and equipment or capital goods, the real source of growth in an economy. As Murray Rothbard eloquently said, this is a transfer of "resources from the productive [private sector] to the parasitic, counterproductive public sector."
We live on a planet with a constraint called gravity. We can adapt to the law of gravity by creating innovations such as airplanes, but we cannot defy the law of gravity by jumping off a building without a parachute. The same is true in economics and of the law of scarcity. We falsely believe that somehow if government legally counterfeits intrinsically worthless paper or spends someone else's money we will be able to upend the law of scarcity.
J.B. Say once said that economists should be "passive spectators" who do not give advice. He could have added, "and do not sleep with the enemy."
Peter G. Klein
April 08, 2014
Author of The Capitalist and the Entrepreneur, Peter Klein has published numerous books and articles on entrepreneurship from an Austrian perspective. Dr. Klein, who is executive director and Carl Menger Research fellow at the Mises Institute, was interviewed in late 2013 by eTalk's Niaz Uddin on the topic of entrepreneurship:
John P. Cochran
April 10, 2014
The headline in the print edition of the Denver Post of an associated press story on the nomination of Janet Yellen highlights a quote from President Obama, "She understands the human cost when people can't find a job." This statement about then-new Fed Chair Yellen, which emphasizes Yellen's Keynesian-based commitment to the unemployment prong of the Fed's dual mandate, underlies why some economists feared that no matter how bad policy might have been during Bernanke's tenure, policy is likely to get worse rather than get better from a sound money perspective during a Yellen reign. Her empathy for the unemployed was clearly present in her remarks following her first official policy meeting which as reported by the Wall Street Journal "were a notable affirmation of her commitment to low rates until the economy is much stronger." She emphasized, "The recovery still feels like a recession to many Americans, and it also looks that way in some economic statistics." She then chose to support her remarks not with usual econ jargon and statistics, but "Ms. Yellen instead exhibited a personal touch ... by coloring her comments with experiences of three people who had struggled to gain full-time work."
April 7, 2014
The "monetary cranks" and "ignorant zealots" of old are back preaching salvation if only we had more inflation. Keneth Roggoff and Fed President Charles Evans did not mince words, while others have been more circumspect. Christine Lagarde warns us of the "ogre of deflation" and the "risks" of low inflation, while others have been urging easier monetary policy to reduce the value of the yen or the euro. Of course, it's much easier to let this inflation tiger out of its cage than to get it back in. We have ample evidence that once inflation picks up, it's extremely difficult to control. Inflation in the US was 1 percent in 1915, almost 8 percent in 1916, and over 17 percent in 1917. It was about 2 percent in 1945 and jumped to over 14 percent by 1947. During the 1970s, inflation was mild in 1972, and climbed to 11 percent by 1974 and stayed at very high rates until Volker raised interest rates to 19 percent to tame the beast.
April 3, 2014
A recently published article at The Week, titled "How can we unleash positive animal spirits into the economy? Change the narrative," provides a clear example of what's wrong with the perception of economics and why modern economic approaches, possibly aiming to amend the shortcomings "identified" by this perception, is at a loss of explaining anything important.
March 26, 2014
My position is not incompatible with urging that we try to extend our sense of "we" to people whom we have previously thought of as "they."
—Richard Rorty on solidarity
One day, my son Sid and I were looking at the various rocks in his collection. He was about six at the time. I used to get frustrated at that bucket of rocks. He'd put any old rock in there and find a new one practically every day. The collection got heavy.
"We have rocks coming out of our ears," I said. So I asked him about his collection, pointing out certain rocks to see why he liked them. Each time he would find some little detail—a color, or glint.